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Olympus may have escaped the flooding in Thailand but it is facing a storm apparently of its own making. From this Bloomberg article:

Nippon Life Insurance Co., the largest shareholder of Olympus Corp. (7733), and Harris Associates LP, asked the company to respond to investors’ concerns about takeover payments revealed by its fired chief executive officer, which prompted a 47 percent plunge in the stock price...Olympus, which started business 92 years ago, said yesterday it paid $687 million in fees to advisers for its $2 billion purchase of Gyrus, almost double the 30 billion yen ($391 million) Chairman Tsuyoshi Kikukawa disclosed a day earlier.

Cayman Islands-incorporated AXAM Investments Ltd., one of the two advisers that received the fees that were more than a third of the $2 billion purchase price, was removed from the local registry in June 2010 for non-payment of license fees, according to the PricewaterhouseCoopers report. The PwC report said it couldn’t establish who were the owners of AXAM.

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I certainly hope not. Rather like Kodak I imagine that in the worst case the viable bits will be sold off. But this article by the Wall Street Journal makes depressing reading. They write:

With a 44% drop in the past two sessions alone, the company has now lost three-fourths of its market value since chief executive Michael Woodford was unceremoniously ousted on Oct. 14 after he raised questions about steep payments made in those four 2006-08 deals.

The drop in the share price is precipitous as the following graph shows:

That chart was a snapshot from a few minutes prior to posting but you can click on it for the latest data. I'm no financial whiz but I would guess that the future of Olympus is on a knife edge in terms of who owns what. But, as with Kodak and their image sensor business, I wouldn't use that as a reason for avoiding any of Olympus's excellent cameras. I'm as sure as any outsider can be that the camera business will continue to flourish even if, and it's a very big "if", that business is in different hands.

That was so totally short-sighted and unnecessary of the bosses of Olympus to have created such an economic nightmare. I'm sorry for the decent people who are working for them. They've created such great cameras. And now this.

The speculation of who might buy Olympus on the cheap does depend on what they're after. We're only looking at photo products, but Olympus also makes products in other areas too.

I can't see the likes of Samsung or Nikon buying Olympus as there is a lot of overlap with their existing kit. So unless Olympus has some "must have" patents I don't think it'll be an attractive purchase. Sony taking over Minolta was very different as Sony never had a SLR presence before. Canon as the only major player without mirrorless is less unlikely, but I still don't rate as likely as they're much more likely to go their own way than just adopt an existing format.

If I had to make a wild prediction, I think the likes of Sigma might be more interested, if they have the financial clout to do so. Even with the massive stock losses recently, I think Olympus is far too big for Sigma to swallow.

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With Olympus shares climbing over the last few days I had hoped to share good news today but when I checked the price I saw that the shares had fallen 16.33% (source). The reason wasn't hard to find:

Japanese officials say that at least $4.9 billion is unaccounted for in a financial scandal at Olympus and are investigating whether much of that money went to companies with links to organized crime.

That is how this article in the New York Times kicks off. Pretty grim but Olympus insists it has enough cash to keep going (source).

Olympus has a proud heritage and it's really sad to read of this alleged wrong-doing. But it's good to read that their cash reserves are so strong with the implication that the business will continue. But strong cash reserves coupled with a plummeting share price carries its own dangers.